In today’s market, one of the smartest investments you can make is in real estate. However, you can quickly get into trouble if you aren’t well-versed in the complexities of the commercial real estate business, or if you don’t do your homework before investing in real estate. In order to be successful, there are some definitive dos and don’ts you should follow before buying into a piece of commercial property.
- Know your budget and goals
Have a clear idea of how much money you can spend, what you hope to gain from your investment, and make sure you have your finances in order prior to investing.
- Take a tour and get to know the neighborhood
When looking at commercial real estate for sale, do your research on the surrounding area, from comparable sales to crime rates. Tour the property with an inspector and/or contractor prior to putting in an offer.
- Consider the future
Be sure to be realistic about how your real estate investments can benefit you in the next couple of years. Make sure the property is a good fit for what you have in mind for your business plan, and how it may affect your end game.
- Blindly invest
Don’t rely on commercial real estate listings to be accurate or forthcoming about potential pitfalls. You may find agents who are helpful, but nothing can replace taking a tour (or several) yourself and getting input from experts you trust.
- Underestimate costs
Typically, it’s always best to prepare for the worst. Don’t miscalculate your cash flow or fail to factor in important expenses. Taxes, management and maintenance fees, overhead, and insurance are just some of the payments you need to keep in mind.
- Rush into things
Consider your options carefully before putting in an offer and signing on the dotted line. If a low-price property seems too good to be true, chances are that it is. Commercial real estate listings can sometimes tell only part of the story. Getting advice from industry professionals can be vital to the success of your investment. It’s easy to be distracted by visuals, and it can mask the problems you should really see before handing over your money.
Investing in commercial real estate can be an exciting venture, but it’s important to recognize the plausible pitfalls as well as the potential prosperity. Consulting with a real estate investment group or a qualified and trusted professional can make all the difference between a sound investment and a bona fide bust.